WASHINGTON — President Trump has signed into law the U.S.-Mexico-Canada Trade Agreement (USMCA), his administration's replacement for the North American Free Trade Agreement (NAFTA).
In a speech preceding the signing, Mr. Trump praised the USMCA as "the largest, fairest, most balanced trade agreement ever achieved." He said the agreement will boost the nation's Gross Domestic Product by 1.2%.
Representatives of the U.S., Mexico and Canada signed the 2,000-plus-page agreement Dec. 10 in Mexico City, and the legislatures of all three countries ratified the agreement shortly thereafter, including a 385-41 December vote in the U.S. House of Representatives and an 89-10 vote in the Senate on Jan. 16.
Among other things, the trade deal increases the percentage of parts in vehicle assembly that must come from North America, to 75% from NAFTA's 62.5%.
Also under the USMCA, at least 40% of auto content must be made by workers earning at least $16 per hour to qualify for tariff exemptions.
The agreement requires Mexico to allow workers to form independent unions, as opposed to the employer-controlled unions allowed under NAFTA.
Because independent unions mean higher wages for Mexican workers, the USMCA is expected to create an estimated 175,000 jobs in the U.S., which no longer will face a wide wage differential with Mexico.
The pact also retains tariff-free treatment for goods and components that cross North American borders.
Industry organizations expressing support for the pact include the United Steelworkers union, Motor & Equipment Manufacturers Association (MEMA), Auto Care Association (ACA), National Retail Federation (NRF), American Chemistry Council (ACC) and National Association of Manufacturers (NAM).
"The president's signature completes our country's steady, bipartisan march toward ratifying a trade agreement that can benefit all Americans," ACC President and CEO Chris Jahn said.
"The allied North American chemical industry is ready to leverage USMCA to reduce our manufacturing costs, boost our exports and stimulate new growth and job creation throughout the region."
Following the Jan. 16 Senate approval of the USMCA, MEMA also issued a statement praising the agreement.
"The USMCA will help ensure that motor vehicle suppliers in the U.S. stay competitive in the global marketplace," MEMA said. "This action begins to establish economic certainty, which is essential to preserve and enhance vital North American supply chains for the U.S. motor vehicle sector."
ACA President and CEO Bill Hanvey also applauded the Trump administration and Congress for working together to make the USMCA a reality.
“Mexico and Canada are important trading partners both as sources of imports and destination for exports,” Mr. Hanvey said.
The two countries represent 71% of U.S. auto parts exports, at $63 billion, and 48% of imports, at $76 billion, according to Mr. Hanvey.
“Having USMCA in place will allow our members to continue to provide vehicle owners with high-quality and affordable repair and maintenance,” he said.